A Quick Guide To This Weekend's G20 Meeting

One of the biggest macro events we're watching right now is a
meeting of G20 finance ministers taking place in Mexico City
starting today and continuing into the weekend.

It seems likely the meeting will focus on how to deal with the
fallout from an upcoming Greek default—selective or not—but there
are few more points we'll be watching closely:

The IMF's willingness to bail out Europe: The
U.S. in particular has proved resistant to increasing the size
of funding available to support the eurozone in its crisis, and
given Treasury Secretary Timothy Geithner's comments on
CNBC this
morning that sentiment is likely to persist. Even so, we could
see more leaders fearful and hence flexible as Greece prepares
to go through the first developed economy default in 60 years.
PIMCO
chief executive Mohammed El-Erian argued this morning that
the G20 must forcefully resist this pressure.

A focus on global growth: Deleveraging
remains a big worry for the G20, particularly amid rising
concerns about the sustainability of global growth. Finance
ministers will likely explore more ways to foster sustainable
economic expansion, but any groundbreaking formal initiative
would likely come as a surprise.

This summary from Morgan Stanley's Currency research team adds a
little color to that last point:

The G20 meeting this weekend could
put the focus back on global growth, and hence the next round of
PMIs over the coming week will be of increased importance. The
early “flash” releases of the Chinese and European PMIs revealed
some areas of weakness. The sharp decline in the Chinese export
component and the surprising weakness in the German surveys is
not an encouraging sign for demand in developed markets, in our
view. Any signs that the recent stabilisation in PMIs is just a
pause will leave the high-beta currencies vulnerable once
again.

The next summit of G20 leaders is scheduled for June 18-19 in Los
Cabos, Mexico.